Monday, July 07, 2008

There's an old Polish proverb which states "Under capitalism people exploit people; under communism the reverse is true." I recalled this after a discussion with my coworker Simon the other day as we talked about our various challenges when dealing with large corporations.

My job has brought me into contact with several large, multinational companies. Some are my clients, some aren't (and full disclosure: this is not a 'naming names' post, it's a general philosophical post.) Dealing with these corporations has been an eye-opening process for me; before agency PR, my background was at a startup games company and an Oklahoma state government agency as well as some freelance writing and editing gigs. I worked for State Farm for a few summers, but never really got a taste for the full company, and State Farm isn't a multinational anyway. So my exposure to business was limited to smaller and middle-level companies, and of course government.

What strikes me about massive companies is there is a kind of internal bureaucracy normally associated with socialist and communist countries. In fact, it is the exact kind of bureaucracy many libertarians and Goldwater conservatives oppose in goverment: the kind that is a barrier to progress. I'd be remiss if I didn't indicate that it is exactly the kind of bureaucracy that the Neocon Bush Administration has spent the last eight years creating in America. The same that lead to the ultimate failure of and subsequent distrust in the bureaucracy and the administration that created it following the disasterous and murderous breakdown of the system following Hurricane Katrina. The events following Katrina justify the Goldwater conservative / Libertarian view of bureaucracy in a way that no pseudophilosophical blog post ever could.

The resemblance to this justifiably hated bureaucracy in the internal structure of large companies is remarkable. I'm not claiming that it is as dangerous as a failure of infrastructure, but the process to affect change within these bureaucracies is ultimately so convoluted and Byzantine, especially (from my point of view) as they seek to embrace social media, as to be harmful to the company and its consumers both. I realize that these internal reviews and management structures exist precisely to keep things from changing too quickly, but in the digital world it is as much a liability as it is an asset when preventing change. In fact, it's probably far more of a liability. Bureaucracy is the single-largest barrier to adaptation and positive change in either a company or a government.

But how much of a liability? Dangerous to the company certainly. The ability to not react quickly to customer concerns and to rethink PR and communications as one of interaction and customer service is something that will ultimately doom those companies seeking to engage online and go about it the 'old way' and all that implies. But don't take my word for it: Carl Ichan, CEO of Ichan Enterprises (who owns, among other things, Blockbuster) said it best in his post 'Corporate Democracy Is A Myth:

Many American corporations are dysfunctional because corporate democracy is a myth in the United States. They run like a decaying socialistic state. Our boards and CEOs exist in a symbiotic relationship where the boards nourish the CEO with massive stock options that are re-priced downward if the companies stock declines - making them forever valuable. They reward the CEO with pay packages and bonuses when the stock is floundering or the CEO is leaving the company. Corporate performance and the shareholders welfare seldom enter the picture. What kind of democracy is this? There is no accountability.

Accountability is a word I've thrown around before when discussing the same despicable layers of bureaucracy the Neocons created, as ultimately what bureaucracy does is absolve anyone of responsibility. To go back to Katrina, the only one who really lost his job was Michael 'Brownie, you're doin' a heckova job' Brown, a man who was so criminally underqualified for his postion that whomever appointed him should be tried for the murder of people who perished in the days after Katrina. The bureaucracy created so many layers of confusion that in the end, no one except a crony stooge was accountable and the only action taken was he was fired from a job he wasn't doing and didn't need the income from anyway.

This invites other business-government comparisons as well, some of which are exceptionally relevant to engaging online. I could be snide and say Apple is a fascist dictatorship run by one man's cult of personality, but I won't. Or did I? But I'm more interested in the startup mentality from my experiences at WizKids.

The flexibility and freedom of a small to medium-sized startup is far more anagalous to an anarcho-syndicate collective working together to produce things (as opposed to a commune, which works together for the common good, an important distinction Simon pointed out earlier.) This is interesting in that it elegantly mirrors the behavior of many online communities; even within large 'communities' like Facebook people naturally congregate into smaller collectives to serve their specific interests. I realize that's an oversimplification but it's an interesting insight that the companies best equipped to take advantage of online behavior and step around the (you guessed it: bureaucratic) Old Media are those whose internal operations reflect that online behavior.

I can only speculate as to why this is; a company, like a government, in the end is nothing but a bunch of people with artificial structures. When the media structure operates in the same way as the company or government, then it seems - from a relatively small and nonscientific sample - that it is easier for the two to interface. This may be why large companies are so hesitant to embrace social media, as it reflects a system and structure so fundamentally different than the internal bureaucracies they've created that it is too alien for them to comprehend.

I certainly welcome thoughts from anyone who bothered to read this entire rambling piece.

2 comments:

Why is it? I think you touched on it when you mentioned/implied that there is some 'social value' to the institutional inertia that a bureaucracy winds-up producing. The question here is weather this 'social value' is adaptive or a spandrel to the efficiency added by bureaucracies? There may well be a benefit curve for bureaucratic size.

How does it continue? I have seen it in government where, with spending cuts, the bureaucracy will whittle away at the service that an agency provides in order to save administrator jobs. How often have you seen convoluted procedures for purchases introduced to "save money" that really cost the organization more? All done to insure administrative/bureaucratic raison d'être. Rent-seeking is what it is called in the jargon-jungle.

Very true. It is a myth that a (large) company is more efficient than Government. I've worked for both - and, at the very least, Government has some accountability.

Small businesses and startups can by dynamic. Once you get to playing with millions of £/€/$ of other people's money - you need governance. You need process. And these are all things which are anathema to quick decision making and dynamic behaviour.

Take a look at this post from James Whatley on corporate evangelism. In my comment I explain how big businesses just can't move fast enough to react any more.

Perhaps, internally, business units need to have more autonomy. If they can locally manage P&L and PR, perhaps they can be as efficient as the mythical business. Maybe employees should elect their managers?

But all this leads to more duplication and may lead to increased internal bureaucracy.